The much-awaited FAME III (Faster Adoption and Manufacturing of Electric Vehicles) legislation will significantly change India’s electric vehicle (EV) market. Scheduled to launch in July, this second phase builds upon the framework established by FAME II, which concluded in March 2024. The following three important facets of the soon-to-be FAME III policy are something you should know:

Continued Incentives for Smaller EVs

The adoption of electric vehicles (EVs) in India has been mostly fueled by two- and three-wheelers, not by cars. FAME III intends to maintain the momentum by keeping up incentives for these smaller EVs in recognition of this trend. Electric two-wheelers were given a 15% price subsidy under FAME II, with incentives of up to Rs 22,500.Β 

Subsidies for electric three-wheelers were much greater, reaching up to Rs 1,11,505. These subsidies are essential. They enable a greater proportion of the populace to access electric mobility, especially in cities where two- and three-wheelers are more common.

No Incentives for Electric Cars?

The possible removal of electric vehicles from the benefits of subsidies is one of the biggest modifications to the proposed FAME III policy. During the FAME I phase, the government subsidized electric vehicles costing under Rs 15 lakh (ex-showroom), making them more accessible to private consumers. FAME III may decide to do the same, as FAME II did not extend these advantages to private electric vehicles.

Instead, the emphasis might go to powerful hybrid vehicles. In the Indian market, robust hybrids are becoming more and more popular despite their higher price tags. If these cars cost less than Rs 15 lakh, the government may offer incentives, which would push automakers to create more reasonably priced hybrid models. 

The Toyota Urban Cruiser Hyryder, now the most reasonably priced strong hybrid, starts at Rs 16.66 lakh. This raises the possibility that automakers might close the gap to be eligible for FAME III subsidies.

A Push for Hybrid Cars Over EVs

With hybrid cars becoming more and more popular, FAME III could open the door for this technology to be integrated and accepted more widely. Strong hybrids provide a strong measure for cutting pollutants and fuel usage by combining electric propulsion with conventional combustion engines. The expected subsidies for hybrid cars may stimulate the market. This could encourage producers to provide more affordable models and hasten the transition from gasoline and diesel cars to more environmentally friendly alternatives.

Conclusion

The Indian government is set to continue pushing for electric mobility with FAME III strategy, focusing on smaller EVs and potentially powerful hybrid cars. This strategy may not directly favour electric vehicles, but it aims to significantly increase EV adoption through incentives for two-, three-, and four-wheelers, as well as hybrids.

Stakeholders are anxiously anticipating the final specifics of the policy. It is still in the proposal stage and will determine how India’s electric car market will develop in the future. Keep checking back for more information about FAME III and how it may affect India’s EV market.

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